2.  Rural India is potentially the largest segment of the
Indian market.
 Executives have long recognized that to build real
sales volumes they will have to reach outside the big
cities.
 Case highlights the emerging trends in rural market
 Case is also about the initiatives taken by companies
Like HUL and ITC to target Rural segment
› Project Shakti and E-Choupal have been making inroads
into rural India for years

3.  According to MART
› Rural India buys 46% of all soft drinks sold, 49%
of motorcycles, 59% of cigarettes and 11% of rural
women use lipstick.
 According to NCAER
› Rural households form 71.7% of the total
households in the country.
› Spending in this segment is growing rapidly and
consumption patterns are closing in on those of
urban India.

4.  Companies such as Unilever, Phillips and Nestle have long
been known to India's rustic dukaandaars, or merchants.
 Rural marketing involves persuading people to try and adopt
products they may not have used before
› Colgate has to build toothpaste by convincing
› Coca-Cola is growing at 37% in rural markets, compared
with 24% in urban areas.
 In rural India low penetration rates can be attributed to three
major factors
› Low income levels
› inadequate infrastructure facilities
› different lifestyles.

5.  The objectives of Project Shakti
› To create income-generating capabilities for under
privileged rural women by providing a small-scale
enterprise opportunity, and to improve rural living
standards with greater awareness of health and hygiene
 In 2001, with rural self-help groups (SHGs) started to
educate rural women, while also making them part of the
company's marketing network
 This micro-enterprise offers low risks and high returns
 Direct-to-home distributors
 A typical Shakti distributor sells products worth Rs 10,000-
15,000 a month & earn Rs 700-1,000

6.  The Shakti model was piloted in 50 villages of the Nalgonda
district in Andhra Pradesh.
› Now it has created 26,000 women distributors covering
80,000 villages.
› By 2010, the goal is to recruit 100,000 Shakti distributors
covering 500,000 of India's more than 600,000 villages
› Shakti project includes Shakti Vani (or voice), a social
awareness program, and iShakti, a community portal

7.  Increase in income
 Education to children
 Social Recognition to rural women
 Knowledge about health and Hygiene
 Knowledge of urban areas
 Enhancement of purchasing power
 ICICI partnership gave micro credit

8.  ITC's enhanced distribution network came from the
recognition that the existing agri-produce distribution
channels
› The company exports various agricultural products --
soybean, rice and wheat
› In 2000, ITC embarked on an initiative to deploy
technology to reengineer the procurement of soybeans
from rural India
 E Choupal’s connectivity - both physical and informational --
between the farmer and the market that it facilitated has
allowed ITC to use it for distribution of goods and services
from the market to the farmer

9.  The E Choupal infrastructure consists of:
› A kiosk with Internet access in the house of a trained farmer, called a
Sanchalak
› A warehousing hub managed by the former middleman, called a
Samyojak.
› A collaborative network of companies orchestrated by ITC with a pan-
India presence
 In 2004, ITC introduced the Choupal Sagar
› A rural retail outlet at the hub.
› First was set up at Sehore in Madhya Pradesh.
› This is 7,000 sq. ft. mall sells consumer goods as well as agri-products

10.  Better content of information
 Transport Cost
 Knowledge to access technology
 Weighing Accuracy
 Transaction Durations

11.  Indian rural market is huge just to strengthen the
distribution
 Reliance Infocomm, a mobile services provider. Its
network now encompasses 240,000 towns and
villages, accounting for 42% of the rural population
 Godrej Aadhaar -- plans to set up 1,000 stores across
India in the next five years.

12.  Success of HUL & ITC depicts many other MNC
widen their base in rural markets.
 From the Goenkas to the Gulabchands, from the
Tatas to the Thapars, every major Indian business
group has plans to move into the hinterland
 The battle for rural wallets will include not just
European and U.S. multinationals but also fast-
growing Indian companies.

13.  According to Raju, marketing to rural
customers often
 involves building categories by persuading
them to try and adopt products they may not
have
 used before. "A company like Colgate has to
build toothpaste as a category, which means
 convincing people to change to toothpaste
instead of using neem twigs to clean their
teeth, which
 was the traditional practice," he says. "This is
difficult to do and requires patience and
investment

14.  Companies that have figured this out are
doing better in the villages than in the cities.
Soft drinks
 giant Coca-Cola is growing at 37% in rural
markets, compared with 24% in urban
areas.
 According to Hansa Research, a market
research firm that has published a Guide to
Indian
 Markets 2006, the penetration of consumer
durables has risen sharply in India's villages
between